There are a plethora of businesses set up in Tampa, and it is not so easy to make a decision on which structure you should choose. Once you have registered your business, it becomes challenging to change the legal structure. Thus, careful analysis is required during the initial stages of your business formation. Some of the business attorney Tampa region has are great help in such cases. Some of the important factors to consider while choosing the legal structure of your business are:
- Startup and operational complexity.
There is nothing more simple than a sole proprietorship when it comes down to operational and startup complexity. You register your name first, start operating your business, report your profits, and pay the required taxes on that as personal income. But it can be difficult to obtain without funding. On the other hand, partnerships need a signed agreement to state roles and percentages of profits.
- Consider flexibility.
You need to examine where you want your company to be headed and what your goals are, and based on that, you should choose what kind of legal structure allows you to attain that growth and align with your objectives.
- Your liability.
A corporation carries the least amount of liability because the law holds that it is its own entity. This implies that while customers and creditors may file a lawsuit against the company, they will not be able to seize the officials’ or shareholders’ private property. An LLC gives the same security but with the tax advantages of a sole proprietorship. Partners split the liabilities among them as stated by their partnership agreement.
- Taxes on your income.
All profits in your business are taken into account as personal income, and tax is applied accordingly when the year ends. The LLC structure ensures that you are taxed as an individual and not as a company. You will pay personal taxes if you make payments to yourself from the corporation.
- Control and its division.
LLCs, or sole proprietorships, are probably the best choice for you if you want primary or sole control over the business and its operations. One can negotiate control in a partnership agreement as well. When the corporation is at its initial stage, you can control it, but as it expands, a board of directors is required to run it efficiently.
Consult a business attorney before finalizing a legal structure.
As we mentioned, it gets more difficult to switch legal structures once you have already registered. Thus, it is recommended that you consult with a professional business attorney to make a rational decision by taking all such factors into proper consideration.
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